For decades, the two biggest oil producers in the Middle East have been Saudi Arabia and Iran, two autocratic states that are also rivals in the region. With time, oil revenues have lowered and public discontent has risen. Through the use of a qualitative, comparative case study, this Bachelor’s Thesis aims to examine how the economic, social and political development in these countries has been affected by the oil revenues. From the theoretical viewpoints of Rentier State Theory and Assabiyya, the study concludes that oil revenues, as a considerable source of national income, has created undiversified economies in both Saudi Arabia and Iran. This has caused demands for economic, social and political change, leading to different responses from the respective states. Saudi Arabia has begun to diversify its economy to create several sources of income. The country has also initiated to loosen up its strict religious social codes in the public sphere. This is in contrast to Iran, where the government faces significant financial deficits and has started to exploit its population to compensate for the strained public economy. Additionally, no indication of political reforms towards a more democratic system of governance is seen in any of the two states.